On November 20th, Xiaomi Group released its third-quarter financial data, showing that R&D expenses in the third quarter of this year increased from 41 billion yuan in 2022 to 50 billion yuan, the highest single-quarter R&D expenditure for Xiaomi in nearly two years. Xiaomi said that the growth in R&D expenses is mainly due to the R&D of its smart electric car business and other innovative businesses. During the financial report release conference, Xiaomi Group’s partner and president Lu Weibing responded to the progress of Xiaomi’s car, stating that the production target for the first half of next year remains unchanged, and the second winter test will be conducted next. He revealed that there are about 3,000 R&D personnel for Xiaomi’s car. Xiaomi has made a heavy investment since the announcement of its car manufacturing. Xiaomi Group’s chairman and CEO Lei Jun announced at the end of March 2021 that Xiaomi has a cash reserve of 108 billion yuan, and the initial investment in car manufacturing is planned to be 10 billion yuan, with a future investment of 10 billion US dollars over the next ten years. Manufacturing new energy vehicles “burns money”, with the most critical aspect being the early-stage development of car models, from appearance to the three-electric system, powertrain, and intelligent software. Not only does it require a long development time, but the labor costs involved are also very high. According to Lei Jun, Xiaomi will invest 3.3 billion yuan in R&D expenses for autonomous driving alone in the first phase. The development of a new car model takes at least two years, with development costs of at least several billion yuan. According to Xiaomi’s previous financial reports, R&D investment in new businesses such as smart electric cars has reached 31 billion yuan in 2022. Xiaomi’s R&D investment in cars in the first and second quarters of this year totaled 25 billion yuan.
According to a rough estimate based on the year-on-year growth in the first and second quarters, Xiaomi’s automotive R&D investment in the third quarter is roughly around 16 billion yuan. If calculated this way, Xiaomi has already invested about 7.2 billion yuan in R&D. Xiaomi’s early-stage R&D investment is higher than most of the new forces in the car-making industry. Telsa, NIO, and XPeng’s annual R&D expenses in the early stages range from 1 billion to 2 billion yuan. Usually, subsequent R&D investment will increase year by year, and the high R&D costs can only be amortized through sales volume. In recent years, the increase in R&D investment has become a common phenomenon in the industry. According to data from Statista, global automotive R&D expenditure has grown by over 6.5% year-on-year from 2020 to 2021. High R&D expenditure has become the norm for all automotive brands. NIO has stated that it will fix R&D investment at 3 billion yuan per quarter in the future, while XPeng predicts that R&D expenses will reach 10 billion yuan by 2025.